"If a student does not graduate from college, they are significantly more likely to default on a student loan," explains Ted Lannan, senior market research analyst at Inceptia. "Our analysis helps predict who is at risk of dropping out and defaulting on loans."

Inceptia researched Tusculum's student information--including high school location, high school grade point average, ACT/SAT scores, socioeconomic background and college major--to help the college determine how best to position undergrads for academic and financial success.

"Inceptia was able to take 10 years of our data, analyze it and show us the traits of students who were defaulting," says Thomas H. Stein, vice president of enrollment management at Tusculum College. "We took those results and adjusted our recruiting efforts so we would attract students who would do best at Tusculum. For example, we found that students with about a 3.0 GPA and 23 ACT score could easily make it here and therefore would be more likely to repay their loans upon graduation."

Colleges and universities are under the gun to reduce loan default rates, not only because they indicate to prospective students whether or not the college has sound financial aid policies and student support services, but because the federal government can block loans from being offered at schools with very high default rates. …